State will spend €60m on Cost of Living Allowance

The state will spend €60 million more this fiscal year as a result of the increase since June in the Cost of Living Allowance (CoLA), MPs heard on Tuesday.

The funds are included in the government’s supplementary budget, currently under review by lawmakers. The supplementary budget – the second of this year – totals €361 million. It’s expected to go to the House plenum for a vote later this week.

In a letter to MPs, the finance ministry explained the increase in CoLA expenditures consists of two parts – first, €15.4 million following the agreement to link the payout to 67 per cent(up from 50 per cent) of the consumer price index.

The other €44.6 million concerns the adjustment to CoLA itself according to projected inflation – revised upward from 4.87 per cent to 7.03 per cent.

For fiscal year 2024, the ministry estimates that extra spending on CoLA – compared to expenditures before the agreement between trade unions and employers brokered by the government – will come to €36.6 million.

Also on Monday, MPs discussed the €25.4 million allocated for the purchase of the Metropolitan building in Nicosia, to house the ministry of labour and the social insurance services. The current premises of these government departments are considered structurally unsafe.

The auditor-general as well as the attorney-general’s office have previously voiced concerns about the intended transaction.

The Audit Office had said a reasonable price for the building would be around €12 million – not €25 million.

It added that as long as the Republic possesses state land which can be utilised for constructing buildings and at advantageous prices for the taxpayer, this should be the primary option.

During a recent session of the House finance committee, an official said work on delivering the Metropolitan building is ongoing and that the labour ministry is expected to move there in September.